This is the exact embedded text of the captured official document.
Snapshot 1f1daf71dc65 · verified 2026-06-07 ·
original document ·
archived snapshot ·
unofficial consolidation, the official version is held by the municipal clerk.
P
SA NT 101 M
Title: Investment
Policy
Subject:
Investment
Policy
Category:
Policy
Policy No.: 2017- 05- 31
M& C Report
No.:
Effective
Date: 2017- 06- 12
Next Review
Date:
Area( s) this policy applies to: Investments
Office Responsible for review of this Policy: Finance
Related Instruments:
Policy
Sponsors:
Commissioner
of
Finance
and
Administrative
Services
Document
Pages: This document
consists
of 12 pages.
Revision
History:
Common Clerk' s Annotation for Official Record
Date of Passage
of Current
Framework:
2017- 06- 16
1 certify that this Policy was adopted by Common Council as indicated
above.
Common
Clerk
Date
Date Created:
Common
Council
Approval
Date:
Contact:
2017- 05- 31
2017- 06- 12
Commissioner
Finance and Administrative
TABLE
OF CONTENTS
1. POLICY...........................................................................................................................
2
DEFINITIONS........................................................................................................
2
SCOPE..................................................................................................................
3
OBJECTIVES..........................................................................................................
3
STANDARD
OF CARE............................................................................................
4
ETHICS
AND CONFLICT
ON
INTEREST..................................................................
4
2. INDIVIDUAL
RESPONSIBILTIES........................................................................................
5
DELEGATION
OF AUTHORITY...............................................................................
5
AUTHORIZED
INVESTMENT
DEALERS AND FINANCIAL
INSTITUTIONS ................
6
3. INVESTMENT
OPPORTUNITIES........................................................................................
6
4. RATINGS
AND CONSTRAINTS..........................................................................................
7
RISK TOLERANCE..................................................................................................
7
PORTFOLIO
CONTRAINTS....................................................................................
7
OTHER CONTRAINTS............................................................................................
8
5. REPORTING.....................................................................................................................
8
REPORTING..........................................................................................................
8
DEPARTMENT
INVESTMENT
POLICY
GUIDELINE
ADOPTION...............................
8
6. APPENDICES..................................................................................................................
9
City of Saint John
Investment
Management
Policy Guidelines
SA INT IO1. 1
SECTION I: POLICY
1.
POLICY
STATEMENT
The City of Saint John invests funds not required for operating cash flow, to ensure maximized
return on its investment for the desired risk level.
2.
RESPONSIBILITY
It is the responsibility
of the Commissioner
of Finance
and Administrative
Services
to ensure
that this Policy is followed.
PURPOSE OF THE POLICY GUIDELINES
The purpose of this policy guideline is to document a framework for the prudent management of the
City of Saint John' s investment portfolio " Funds" within an acceptable investment risk tolerance level.
It is the policy of the City of Saint John to invest public funds in a manner which will provide the
optimal blend of investment returns and principal protection while meeting the daily cash flow and
liquidity
demands
of the
City of Saint John, and
complying with statutory
requirements
of the
Municipalities Act, the Control of Municipalities Act, and the
Trustees Act of the Province of New
Brunswick.
1. DEFINITIONS
Funds: For investment purposes, funds are defined as cash which is not required for day to day
operations.
Benchmarks: For the purpose of measuring the performance of the portfolios, the following
comparators will be used.
Short- term investments -- Government
of Canada
3 month Treasury
Bill average
Medium- term investments-- Government
of Canada
3 year Benchmark
Bond average
Long- term investments -- Government of Canada long- term Benchmark Bond average
Investments:
Short-term investment portfolio consists of cash or liquid securities with a maturity date of one
year or less.
Medium- term investment portfolio consists of securities with an original maturity date from
one to five years.
2
City of Saint John
Investment
Management
Policy Guidelines
SA INT IO1. 1
Long-term investment portfolio consists of securities with an original maturity date that
exceeds
five years.
Liquidity: defined to the City of Saint John as the ability to access funds within a maximum of 30 days
after requesting redemption of investments funds.
2. SCOPE
This Policy Guideline applies to the investment of all cash assets held for short-term, medium, and
long- term uses in the City' s various funds.
Investment
Portfolio
of Funds
General, and Water and Sewer Operating
Funds
Operating
and Capital
Reserve
Funds
Land Sales, Subdivision, Parking Land, and other separate funds
Retirement allowance account, development obligations, and other deposits held for
future payment of long-term liabilities
The City' s funds will be invested according to the liquidity needs for operating cash flow, return on
investment requirements of long-term obligations, and the protection of principal for medium term
uses.
3. OBJECTIVES
Principal Protection
Safety of principal
is the foremost objective of the investment
program. Investments
shall
be
undertaken
in
a manner
that
seeks
to ensure
the safety
of principal,
and the
preservation
of the
purchasing power of principal in the overall Fund in the short, medium, and long- term. The goal
is to
manage credit risk, interest rate risk, and inflation
risk.
Liquidity
The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may
be reasonably anticipated.
Return on Investment
The Fund shall be constructed with the objective of attaining, at minimum, a benchmark rate of return
throughout varying budgetary and economic cycles, taking into account investment risk constraints
and liquidity needs. Return on investment is of secondary importance compared to the preservation of
capital and liquidity objectives.
3
City of Saint John
Investment
Management
Policy Guidelines
SA INT IO1. 1
4. STANDARD
OF CARE
Prudence
Investments shall be made exercising the care, diligence and skill that a person of ordinary prudence
would exercise in dealing with the property of another person, considering the probable safety of
principal as well as the probable income to be derived, and having regard to the circumstances of the
funds, including:
a)
its assets,
b)
its beneficiaries or purposes,
c)
its probable duration, and
d)
a reasonable
balance
between
risk and return.
The
carrying
out
of investment
activities
in
accordance
with
this
policy
guideline,
and
with
the
judgment, diligence, and
care, under circumstances then
prevailing, which
persons of prudence,
discretion and intelligence exercise in the management of their own affairs, not for speculation, but for
investment,
shall
relieve the
investment officers of personal
liability, provided
deviations
from
expectations are reported in
a timely fashion and appropriate action is taken to control adverse
developments.
Internal
Controls
Management shall establish a system of internal controls, which shall be documented in writing. The
internal controls shall be reviewed by the independent auditor. The controls shall be designed to
prevent the loss of public funds arising from fraud, employee error, and misrepresentation by third
parties.
S. ETHICS &
CONFLICT
OF INTEREST
Officers and employees involved in the investment process shall refrain from personal business activity
with the same individual( s) with whom business is conducted on behalf of the City.
Individuals involved with the investment
process shall refrain from
personal
business activity that
could
conflict
with
proper
execution
and
management
of the
investment
program
or impair
their
ability to make impartial investment decisions.
Individuals involved with the investment process shall not knowingly permit a situation to arise in
which:
a)
the individual' s personal interest conflicts with the exercise of the powers or performance
of
this policy, or where
b) the individual may derive any personal benefit or a benefit for any other person.
4
City of Saint John
Investment
Management
Policy Guidelines
SA INT I01-1
SECTION II: INDIVIDUAL RESPONSIBILITIES
1. DELEGATION
OF AUTHORITY
Authority to manage the City of Saint John' s investment
program
is derived from the Investment
Management
Policy Statement.
The City delegates the management
of the Funds to various agents including certain Officers of the
City. The agents and Officers of the City include:
the Commissioner
of Finance
and Administrative
Services,
the Comptroller, and
the Senior Manager of Financial
Planning, Reporting &
Analysis
and
the Assistant Comptroller
Management
of the investment
portfolio
Funds
and responsibilities
have
been
allocated
as follows:
Council
State the goals of the Corporate Program and articulate the desired results for the community.
Receive and adopt an Investment
Policy to achieve those results.
Officers' Responsibilities
Review the Policy and if appropriate make recommendations to Common Council for changes.
Ensure that the Cash- flow and Investment Management Service provided by the City meets
the goals of the Corporate
Program
and achieves desired
community
results
and
policy
objectives.
Select
investment
dealers
and
institutions ( the " Brokers")
to
assist
the
Commissioner
in
meeting performance objectives for the Fund.
Review the
Fund' s performance
on
a
regular
basis
and
provide
a
report to the
Finance
Committee annually.
To be responsible for the delegation of any responsibility not specifically mentioned in the
policy or policy guideline.
Validate
and report
the rates of return
on the
Funds, based
on book and market
value.
Select
specific
investments
for
the
Funds,
recognizing
the
quality
and
diversification
requirements
established
in this policy guideline, and subject to approved
signing authority.
Seek to maximize
and preserve
the investment
return
on the Funds, after ensuring
that the
foregoing liquidity, quality and diversification requirements have been satisfied.
Manage the securities held by the Funds in accordance with the Policy, policy guidelines, and
applicable
legislation.
Work to meet the benchmarks and targets.
5
City of Saint John
Investment
Management
Policy Guidelines
The designated
Officers of City of Saint John may from time to time engage consultants or other
advisors to assist them in fulfilling their responsibilities.
2. AUTHORIZED
INVESTMENT
DEALERS
AND FINANCIAL
INSTITUTIONS
All investment dealers and financial institutions used for investment transactions will be members in
good standing
of the Investment
Industry
Regulatory
Organization
of Canada ("
IIROC"),
Mutual
Fund
Dealers Association ("
MFDA") or the New Brunswick
Securities
Commission.
Preference will
be given to investment
dealers and financial institutions who are members of the
Responsible
Investment
Association ("
RIA").
SECTION III: INVESTMENT OPPORTUNITIES
The following are the investments permitted in the Fund.
Eligible Securities as defined in the policy guideline.
Investments in internally financed City of Saint John' s projects.
All investments
must
be denominated
in Canadian
dollars.
Investments in derivatives, swaps, options, forward contracts, or futures are prohibited, unless they
are an interest rate or exchange rate hedging strategy related to a specific transaction, or group of
transactions, and authorized by the Commissioner of Finance and Administrative Services.
Investments in shares, warrants, convertible debt securities, or other equities, are prohibited
unless
they are equity securities of a Canadian Schedule "
I"
Chartered
Bank.
Funds may be invested or reinvested in one or more of the following:
a)
securities
of the New Brunswick
Municipal
Finance Corp;
b)
securities that are obligations of, or are guaranteed by Canada or a province;
c)
investments guaranteed by a Canadian chartered bank;
d)
deposits in a savings institution, or non -equity shares of a credit union whose deposits are
100% guaranteed by a Provincial Government or the Federal Government;
e)
commercial paper or bonds issued by a company incorporated under the laws of Canada or a
province, the securities of which are rated
in the highest
rating category
by at least
2
recognized security rating institutions;
All investment
categories that are not explicitly permitted
are prohibited.
L
City of Saint John
Investment
Management
Policy Guidelines
SA INT I01-1
SECTION IV: RATINGS AND CONSTRAINTS
1. RISK TOLERANCE
Investments shall be made with the degree of judgement and care that persons of prudence, discretion
and
intelligence
would
exercise
in the
management
of their
own
affairs, not for speculation,
but with
priority given firstly to safety of capital, secondly liquidity and thirdly to investment yield. The standard
of prudence to be executed
by City staff making investment
decisions shall be the " prudent
person"
standard. Staff who act in accordance with the City' s investment policy and exercise due diligence shall
be relieved of personal responsibility for an individual security' s credit risk or market price changes
provided that deviations from expectations are promptly reported in a timely manner and appropriate
action is taken to limit losses in the event of adverse developments.
Investments held in the Fund must be rated by at least one rating agency, namely Moody' s, Standard &
Poor' s ( S&
P) or Dominion
Bond
Rating Service ( DBRS).
All
investments
must
be
Investment
Grade (
at
least A by S& P, or equivalent by DBRS or Moody' s.), as classified
in Appendix
A. In the
case where
a
security is rated by more than one agency listed, the higher ratings will apply.
The total Fund will be limited to the following credit rating thresholds on a weighted average basis ( as
defined by S& P or equivalent):
Rating
Up to
AAA
100%
AA
90%
A
70%
The maximum
exposure to
a single investment security
is defined
in Appendix
II.
Due
to
market
fluctuations, maximum percentages may be exceeded at a point in time.
Securities
need
not be
liquidated
to
rebalance
the
portfolio;
however,
consideration
should
be
given
to this
matter
when
future
purchases
are made
to ensure
that appropriate
diversification
is maintained.
2. PORTFOLIO
CONSTRAINTS
The primary constraints relate to safety of invested capital and maintaining the liquidity of the
portfolio.
All securities held in the portfolio shall have a maturity as defined by short-term, medium
term and long- term investments.
Cash &
Marketable Securities: The deemed rating for cash, including the current account,
High Interest
Savings Accounts, redeemable
GICs, Bankers' Acceptance ( BA' s), Bank Deposit
7
City of Saint John
Investment
Management
Policy Guidelines
Note ( BDA' s) and marketable securities will be equal to the rating of the institution it is being
held
in.
Credit Union Deposits: The deemed rating for securities issued by a Credit Union will be
equal to the rating of the province that the credit union resides in and is guaranteed by.
Bank Deposits: The deemed rating for securities issued by a bank will be equal to the credit
rating of that bank.
Securities issued by a Government entity: The deemed rating for securities issued by a
Government entity will be equal to the credit rating of that province, country, or equivalent.
3. OTHER
CONSTRAINTS
The Fund shall not borrow funds to acquire securities or otherwise deal in margin trading.
All investments are to follow the above listed constraints laid out per this policy guideline.
An exception can be made when the Officers for City of Saint John listed under delegation of
authority are in agreement that there is an investment opportunity that lies outside the
constraints governing this policy guideline. Any such investment
must comply
as an eligible
investment defined in this policy guideline. A maximum investment allocation not exceeding
15% of the City of Saint John' s total portfolio will be permitted.
SECTION V: REPORTING
1. REPORTING
The designated officers will provide an annual report to the Finance Committee on the performance of
the portfolio the following year.
2. DEPARTMENT
INVESTMENT
POLICY GUIDELINE
ADOPTION
The City of Saint John' s investment policy guidelines shall be implemented
by the Commissioner of
Finance and Administrative Services. The policy guidelines shall be reviewed periodically as required
due to changes in the economy or City' s requirements and any modifications made thereto must be
approved by the City Manager.
F-11
City of Saint John
Investment
Management
Policy Guidelines
SA I NT IO1. 1 N
SECTION VI: APPENDICES
Appendix
I
City of Saint John
Short Term Investments - Credit Risk Criteria
Investment
Credit
DBRS
Moody' s
S& P
Term
and
Guarantees
Government
of Canada
per
issuer
100% )
Minimum
10% per portfolio;
max. of portfolio
per
issuer
100%; max. % of portfolio per category 100%)
Bonds
AAA
Aaa
AAA
1 year or less
Aa
AA
Aa
AA
1 year or less
Treasury
Bills
R1 - High
P- 1
A- 1
1 year or less
P-
1
R1 - Middle
P- 1
A- 1
1 year or less
Guarantees
and Crown
A-
1
1
year
or
less
R1-
Low
Corporations
R1 - High
P- 1
A- 1
1 year or less
R1 - Middle
P- 1
A- 1
1 year or less
Provincial Governments
and
Guarantees
Max. 50% of portfolio; max. of portfolio
per
issuer
100% )
Bonds
AAA
Aaa
AAA
1 year or less
AA
Aa
AA
1 year or less
A
A
A
1 year or less
Treasury
Bills. Promissory
Notes,
R1 - High
P-
1
A- 1
1 year or less
Guarantees
R1 - Middle
P- 1
A-
1
1
year
or
less
R1-
Low
P - 1/
P- 2
A -1/ A- 2
1 year or less
i
City of Saint John
Investment
Management
Policy Guidelines
SA INT i01-1 N
City of Saint John
Short Term Investments - Credit Risk Criteria
Investment
Credit
DBRS
Moody' s
S&
P
Term
Major Canadian
Bank " Schedule
I"
Maximum
50% of portfolio; max. of portfolio per issuer $ 50M)
R1 - High
P- 1
A- 1
1 year or less
R1 - Middle
P- 1
A- 1
6 months or less
111- Low
P - 1/
P- 2
A -1/ A- 2
3 months or less
Commercial
Paper
Maximum
25% of portfolio; max. of portfolio per issuer 25%)
Asset - Backed
Commercial
Paper
AAA ( 111 High)
Aaa (
P- 1)
AAA ( A- 1)
1 year or less
Secured by a Schedule 1 Bank
Guarantee)
City of Saint John
Medium
and Long- Term Investments -
Credit Risk Criteria
Government
of Canada
Minimum
25% of portfolio;
max. of portfolio
per
issuer
20%)
AAA
Aaa
AAA
Unlimited
AA
Aa
AA
Unlimited
Provincial Governments
and Guarantees
Maximum
50% of portfolio; max. of portfolio per issuer 50%)
AAA
Aaa
AAA
Unlimited
AA
Aa
AA
30 years or less
10
City of Saint John
Investment
Management
Policy Guidelines
Appendix
II
Eligible
List of Counterparties (
Investment
Entities)
Investments by or on behalf of the City of Saint John shall be made in accordance with the Investment
Policy. The City of Saint John may invest in the following entities:
The Government of Canada and its Guarantees
Federal
Government
Business
Development
Bank
Canada Mortgage and Housing Corporation
Canadian Wheat Board
Export
Development
Canada
Farm Credit Corporation
Provincial
Governments
and their Guarantees
Province of Alberta and its Guarantees
Province of Ontario and its Guarantees
Province
of British
Columbia
and its Guarantees
Province
of Quebec
and its Guarantees
Province of Manitoba
and its Guarantees
Province of Saskatchewan
and its Guarantees
Province
of New Brunswick
and its Guarantees
Province
of Nova Scotia
and its Guarantees
Financial
Institutions
and their Guarantees
Bank of Montreal
and its Guarantees
Royal
Bank of Canada
and its Guarantees
Bank of Nova Scotia
and its Guarantees
Toronto
Dominion
Bank and its Guarantees
CDP Financial
Inc.
National
Bank of Canada
Desjardins
Group
Caisse
Central
Desjardins
Canadian
Imperial
Bank of Commerce
and its Guarantees
Credit Unions whose deposits are 100% guaranteed by a Provincial or the Federal Government
11